The more enlightened (in my view) aid types have been wagging their fingers for decades, telling their colleagues to adopt more politically literate approaches to their work. Why isn’t everyone convinced? Neil McCulloch applies a bit of political economy analysis to the aid business.

Over the last fifteen years or more, a new approach to development assistance has been gaining ground in policy circles. Broadly entitled the “political economy” approach, it attempts to apply a more political approach to understanding development problems and, importantly, development “solutions”. In particular, a central tenet of the approach is that many development problems are fundamentally political rather than technical and that therefore solutions to these problems are most likely to come from inside a country’s polity than from outside. Perhaps the most famous recent example of this line of thinking is Acemoglu and Robinson’s 2012 book Why Nations Fail.

Acemoglu and Robinson conclude that if each nation’s fate depends primarily on its domestic political struggles, the role for external development assistance is minimal. However, the response of practitioners to this field is to turn this argument on its head i.e. that is, if indeed each nation’s fate depends primarily on its domestic political struggles, development assistance should be trying to influence these struggles in ways that make pro-development outcomes more likely. Yet despite more than a decade analysis, the political economy “approach” is still rarely used by donors in the field. Why? I think there are four reasons:

Citizens are in the streets and squares clamoring for change with questions of leadership and politics squarely in their minds, but how well placed are development agencies to think about – and act on – such issues?

The Developmental Leadership Program, originally housed at the World Bank, is a coalition of bilateral agencies and NGOs catalyzed by the oft reported failure of donor governance work to effect meaningful change. The Program’s hypothesis is that in any given context there’s a lot more going on to propel (or stymie) reform than a focus on institution building will uncover. This is not to say that institutions don’t matter, but that the conduct of individuals, coalitions and especially elites within any context is a key factor in determining whether broad-based and sustainable development comes about. The Program has commissioned a number of country and sector-level studies to understand the factors that contribute to developmental leadership (as well as the less positive kind), exploring the “room to maneuver” actors have in institutional contexts, and what determines the ways they act.